Gold slumps to worst week in over forty years as Iran war dents rate cut bets

LONDON: Gold prices slipped on Friday, extending their losing streak to eight straight days and heading for their worst weekly performance in over four decades.
Spot gold fell 3.4% to settle at $4,494.44/oz, while gold futures dipped 2.4% to settle at $4,496.16/oz.
Typically acting as a safe haven during times of geopolitical crises, the yellow metal has failed to live up to that status during the ongoing situation in the Middle East. Instead, the dollar has emerged as a safe haven asset of choice, strengthening since the start of the Iran war and weighing on bullion.
After trading in a tight band since the start of the conflict, gold broke through to the downside of that range on Thursday after several major central banks flagged caution over the inflationary effects of the conflict. This in turn fueled expectations for no interest rate cuts in the near-term – a scenario that bodes poorly for precious metals.
Spot gold was down 10.4% for the week – its worst such drop since the first week of March 1983.
Safe haven flows into gold have been vastly overshadowed by a spike in the dollar and U.S. Treasury yields, as markets fret over the inflationary effects of the conflict.
Oil prices shot up to near four-year highs this week, fueled in large part by strikes on Middle Eastern energy infrastructure. The spike in oil saw a swathe of major global central banks flag caution over potential energy-driven inflation.
The Reserve Bank of Australia hiked interest rates, while the Federal Reserve, European Central Bank, Swiss National Bank and Bank of Japan all left rates steady and warned of few changes in the coming months.